Danone Lowers Sales Guidance, Cites Spain, Activia -- Update
December 19 2016 - 6:47AM
Dow Jones News
By Nick Kostov
PARIS--Danone SA (BN.FR) on Monday lowered its sales guidance
for this year, citing problems rolling out the rebranding in Europe
of its Activia yogurt product and weakness in the Spanish
market.
Danone's chief financial officer, Cecile Cabanis, told analysts
the company would miss its previous target of 3%-5% sales growth
for the year by about 0.1 percentage point. Still, the company
raised its margin target for the second time this year as it
continued to keep a tight lid on costs.
"The stabilization of dairy Europe will take longer than
anticipated," Ms. Cabanis said. The fourth quarter "was an
important step for our dairy relaunch and we have to acknowledge
that we're not yet where we wanted to be."
At the same time, Spain "continues to be negative," Ms. Cabanis
said, adding that "Spain is a big market and it impacts the overall
performance."
Its stock fell by up to 3% Monday.
Danone's Chief Executive Emmanuel Faber, who took the reins of
the company in October 2014, has vowed to deliver "strong,
profitable and sustainable growth" by 2020, in part by
restructuring its fresh dairy unit where he has cut costs and
focused on its most popular brands.
In particular, Danone has tried to position Activia, a yogurt
with sales of about 1.5 billion euros ($1.57 billion) in Europe, as
a more high-end product to beat off competition from cheaper
rivals. Danone was forced to drop the health claims it made for
Activia in recent years after the European Union cracked down on
foods that advertise health benefits without sufficient scientific
backing.
In June this year, the company said it would target an
improvement in its like-for-like recurring operating margin, its
most recent profitability target, of between 0.5 percentage point
and 0.6 percentage point. Ms. Cabanis said the company now expected
to beat this target by as much as 0.1 percentage point.
(Matthew Dalton contributed to this article.)
-Write to Nick Kostov at nick.kostov@wsj.com
(END) Dow Jones Newswires
December 19, 2016 06:32 ET (11:32 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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